BofA to Settle with Fannie Mae, Sell Mortgage Assets

Bank of America on Monday announced roughly $11.6 billion of settlements with mortgage finance company Fannie Mae and a $1.8 billion sale of collection rights on home loans, in a series of deals meant to help the bank move past its disastrous 200 8 purchase of Countrywide
Financial Corp.

Bank of America on Monday
announced roughly $11.6 billion of settlements with mortgage
finance company Fannie Mae and a $1.8 billion sale of collection
rights on home loans, in a series of deals meant to help the
bank move past its disastrous 2008 purchase of Countrywide
Financial Corp.

The settlements and transactions and other charges will
result in Bank of America posting only a small profit for 2012's
fourth quarter. The bank is due to report results on Jan. 17.

Bank of America is paying $3.6 billion to Fannie Mae and
buying back $6.75 billion of bad loans from the mortgage company
to clear up all claims that government-owned Fannie Mae had made
against the bank.

Fannie Mae and its sibling, Freddie Mac, have been
pushing banks to buy back loans they sold to the two companies
that never should have been sold to them because the loans did
not meet the companies' criteria for purchasing.

Bank of America said most of the settlement would be covered
by reserves, and another $2.5 billion, before taxes, that it set
aside in the fourth quarter.

A separate settlement over foreclosure delays will result in
Bank of America paying $1.3 billion to Fannie Mae, the mortgage
company said. Bank of America had already set aside money to
cover most of that, but took another $260 million charge in the
fourth quarter to cover the balance.

Bank of America also sold the rights to collect payments on
about $306 billion of loans to Nationstar Mortgage Holdings
and Walter Investment Management Corp.
Nationstar is paying $1.3 billion for the right to service some
$215 billion of loans, while Walter Investment is paying $519
million for the right to service about $93 billion of mortgages.

Reuters first reported that Bank of America was talking to
Nationstar and Walter Investment on Friday.